AGM Statement

Associated British Foods PLC
05 December 2002

5th December 2002

                          ASSOCIATED BRITISH FOODS PLC

                             ANNUAL GENERAL MEETING



At the Annual General Meeting of Associated British Foods plc held today, the
Chairman, Harry Bailey, made the following statement:

Good morning, Ladies and Gentlemen and welcome to the sixty-seventh annual
general meeting of our company, Associated British Foods.

There is a quorum present and we can formally open this meeting.  You may wish
to follow the proceedings by referring to the Notice of meeting, which you will
find on page 76 of the annual report and accounts.

In view of the length of Notice of meeting, I will, with your permission, take
it as read.

Apologies for  absence  have  been   received   from Mr W G Galen Weston, who is
unable to be with us today.

I would like to introduce Mike Alexander who took up his appointment as
non-executive director in January of this year.  As you will be aware from
reading your annual report, Mike is chief operating officer at Centrica and his
wide background in business operations is already contributing to our
discussions.  Mike, please stand and take a bow.

The report and accounts for the year to 14th September have now been in your
hands for some weeks.  I do not propose to visit the detail of a report which
this year runs to 80 pages as we seek to comply with the ever expanding demands
of corporate review and compliance, but I will instead highlight the significant
developments taking place in your company as it moves into the coming year.

It is said that self praise is no praise, but I believe shareholders will agree
that your management has delivered an excellent set of results.  An increase in
adjusted operating profit of 13 per cent; adjusted earnings per share up 14 per
cent and dividends up 12 per cent in a highly competitive non-inflationary
marketplace demonstrate very solid progress.


To build for growth you need solid foundations and much of the last 3 years has
been devoted to ensuring that what we currently do, we do well but also
identifying where we can do even better.  That means improving our management
skills, improving our operational performance and improving our market
penetration.

There is however much still to achieve.  In a group as diverse as ABF with
businesses operating throughout 4 continents, there will inevitably be problem
areas.

In this country we are the single strongest agribusiness and with our critical
mass we operate profitably.  However, much of the UK's agricultural industry is
fragmented and unprofitable.  For example, it takes 20,000 arable farmers to
produce 80 per cent of the cereal crop which is eventually sold to just 5 to 10
businesses.  It takes 12,000 farmers to produce 80 per cent of the UK milk
supply which ends up with 11 processors.  Current market prices in these
products are hovering marginally below or above break even, nor is there any
prospect that these prices will improve in the medium term.

Although the strength of sterling has been a significant adverse factor that is
something which is outside the industry's control.  What is within its control,
however, is the necessity to reduce the cost base and improve the efficiency of
an overly complex and expensive supply chain.  In the longer term, farming like
any other business constituent of the economy, must benchmark itself against the
best and develop long term partnerships to deliver excellence in consumer
service.

As the leading UK agribusiness we are playing a significant role in taking out
cost.  In long term partnerships with our customers, via technical support,
manufacturing and supply agreements and active marketing involvement, we are
strengthening not only our own presence and profitability but helping to improve
the sustainability of this country's agricultural base.

In Australia we have some excellent businesses with nationally recognised strong
brands.  However, some sectors of our Australian group have consistently under
performed in recent years.  We are moving to rectify that situation. In
September we bought out the local minority shareholders and installed new
management tasked with renewing that group's profit growth.   We have just
approved plans to invest £50 million in a state-of-the-art bakery to be located
to the west of Sydney.   This investment will further strengthen our highly
successful baking division giving us increased capacity and the opportunity to
reduce our cost base.

I believe that Australia's economy will grow and that it has an increasing part
to play in the Asian/Pacific region.  George Weston Foods is an important player
in the Australian food industry and is capable of growing and generating a
strong and increasing contribution to ABF's earnings.

The strategic objective in each of our business categories has been to achieve
competitive advantage and necessary critical mass.  Double digit profit growth
in four out of the five categories demonstrates that we are moving in the right
direction.  However, there is a limit to what can be achieved by cost reduction
and improved efficiency and to reach our longer term growth targets we must also
generate additional sales volumes.  In a climate of zero inflation with evidence
of price deflation in some areas, growing our top line is a major challenge.  In
certain areas of our business we are already enjoying strong organic sales
growth, for example in Twinings and in Primark.  However, both in these
companies and in other operations, we seek to expand by the acquisition of
businesses which have a logic and adjacency to our own.  Such businesses can
offer us an enhanced product range and penetration; new technologies;  a broader
geographic spread and of course the opportunity for unit cost reduction.

For example, our ACH base oils business in the US was acquired seven years ago.
  Although a well known and respected name in the industry, it's long-term
strategic position was under threat from the rapidly changing dynamics of the US
grocery supply chain infrastructure.  Since the acquisition of ACH we have
invested to reduce costs and improve efficiencies in its procurement,
manufacturing and logistics management.  This has given us an efficient base to
drive for further growth.

In pursuit of this objective, in 2001 we acquired the Procter & Gamble branded
shortening and oils business.  By integrating this into our own foodservice
business, significant sales, marketing, buying, logistics and manufacturing
synergies have been realised.  As a result, sales and profits are growing
through customer base expansion, introduction of new products and through a
raised level of customer service.

In July 2002 ACH acquired the Mazola corn oil business together with related
corn product brands from Unilever plc.  This is being integrated into our Retail
Grocery Products business.  Again, we have budgeted to achieve major sales and
marketing and supply chain synergies.

The acquisition of these branded oils businesses in 2001 and 2002 in areas so
closely related to our base activities has strengthened our US oils business and
positioned it for significant further growth as the number 1 supplier of salad
and cooking oils to the US retail grocery industry.

This is the background to the video about our ACH operations which we have to
show you today - entitled 'A Recipe for Success'.  I believe you will enjoy it.

I am sure that shareholders will now have a better idea of the scale and depth
of our ACH business in the US and its increasing importance to our overall
results.  Dan Antonelli, the president of ACH, is with us today - Dan, thank you
for that very professional presentation.

Those of you who attend our AGMs on a regular basis will know that each year we
produce a short video highlighting some aspect of our company's operations.  You
will be interested to learn that last year's film about Twinings entitled 'A
Passion for Tea' won the First Place Gold Camera Award in Corporation
Communications at the 35th International Film and Video Festival held in
California.  It was selected from a total of 1500 entries from 33 countries,
making it the top investor relations video of 2002.

Shareholders will also have read of our recent purchase from Novartis of the
Ovaltine business and its associated brands.  The purchase of this great
business brand offers us a wonderful opportunity to strengthen our presence in
the international hot beverage market.

Ovaltine is an adjacent business to Twinings  -  they are sold through the same
sales channels to the same buyers and on to the same retail customer.  Our
existing skills in blending, packeting and distribution will enable us to
integrate the Ovaltine businesses into our own, obtaining further economies of
scale whilst broadening our product range and geographic spread.  We have the
in-house skills to develop and manage international specialist brands and their
distribution channels and we believe that this acquisition will bring new growth
opportunities to both the Twinings and Ovaltine brands.

Ovaltine is a unique heritage brand with a clearly identified and strong market
presence, particularly in the rapidly growing Asian markets.  Although
previously well-managed under Novartis, it was not regarded as a mainstream
activity and we believe we have the scope in combination with Twinings to drive
improvements in performance which will be reflected in growth in both sales and
operating profits.

Growth by acquisition has its risks.  Studies exist which demonstrate that most
acquisitions lead to destruction of shareholder value.  Looking at the recent
carnage in many groups which have grown rapidly by acquisition lends support to
such claims.

However our policy is not to grow by the acquisition route alone, nor to expand
in quantum leaps, but to add value and momentum to our existing businesses by
the selective addition of new products, new markets and new technologies within
the compass of our existing skills.

In practice this means identifying appropriate targets through our own
management networks, exhaustive due diligence and a thorough understanding of
what the integration task involves.  The existing scale of our own operations
will dictate what is within our capacity to absorb.  The faster you swallow and
the bigger the mouthfuls the more you risk indigestion.

Nevertheless, targeted acquisitions are a necessary part of our growth agenda
and we believe we have the clarity of vision and the necessary self-discipline
to add value in this way.

A vital ingredient of any company's value to its shareholders is its ability to
generate cash  -  real positive cash flow.  Don't just look at the Profit and
Loss earnings -  look at the cash flow statement.  How much cash is being
generated and what is happening to that cash.  The free cash flow is what pays
the dividend.  In the past year each of our business categories generated a
positive cash flow.    In the past year we have spent in excess of £450 million
on new fixed assets and acquiring new businesses and yet maintained the level of
our net liquid funds at £1050 million.

Why keep that level of funds on our balance sheet?

Because we believe in growing from a strong financial base.  Our whole history
of development this past 30 years and more has been through the self-discipline
of using our own resources to grow this business.  It has served us well.

It has been said that a company stands like a human being and that the company
legs are its balance sheet.  We believe that for a long journey you need strong
legs.

The reason that we were able to acquire British Sugar was because the company
which owned it was drowning in debts and we had the cash to pay for it.  The
company's shareholders didn't want to sell the business  -  they were forced to
sell by the bankers who ended up controlling their destiny.

No banker should ever be in a position to take away the management's ability to
manage.

Many British companies are today waking up to the reality of under-funded
pension schemes.  Not only are they having to contemplate bearing an increased
funding charge against their earnings but also having to recognise the effect on
the balance sheet of liabilities in their pension funds which significantly
exceed the pension fund assets.

Let me reassure you about ABF.  Even allowing for the recent falls in world
stock markets, our current pension fund assets are sufficient to meet our
liabilities.  Let me also reassure you that our pension schemes are, like the
rest of your company, funded on a very conservative basis.

The Outlook

When I first reported to you in 1999 the FTSE 100 index stood at 6680 driven by
the dramatic rises in the telecoms, pharmaceuticals, media and technology
sectors.  A number of companies in those sectors had yet to break into profit.
At the same time, ABF's stock price had fallen over the year by some 40 per cent
although our operating profits had increased.

Since that time the FTSE 100 has fallen by 40 per cent but ABF's shares have
risen by 66 per cent.  I am tempted to say that sanity has returned to the
market.

Last year I said that 'in my view the world is in for a period (perhaps
prolonged) of low inflation, flat demand and declining growth.  There may even
be a threat of deflation'.  I see no reason to change that statement today.
Despite the best efforts of the Federal Reserve in the US and our own Monetary
Policy Committee there is no evidence to show that reduced interest rates have
helped to kick-start our economies.  However, it is evident that historically
low interest rates in this country are creating a house price bubble which I
believe will create its own problems in due course.  Given the current level of
excess capacity and the low level of corporate and consumer confidence,
businesses will remain reluctant to invest.

However, I wish to place on record that I have never felt more confident in your
company's prospects for continued solid growth.

ABF has used the past 3 years to strengthen its management, focus its operations
and develop a coherent growth strategy.  The progress that has been achieved is
demonstrated by the results and that progress is being maintained.   The current
year has started well and results to date are in line with budgets to deliver
further real growth.

No one can forecast the impact of a war in the Middle East or some unforeseen
major terrorist atrocity.  Outside of such factors, I believe that ABF's
management team, lead by Peter Jackson, will deliver real growth in sales,
profits and earnings per share.


End


For further information, please contact:


Martin Adamson
Geoff Lancaster

Tel:   [phone]


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